10 Mistakes Entrepreneurs Make When Hiring Their First Employees

Posted November 16, 2016

YEC

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

What’s one mistake entrepreneurs can easily make when hiring their first employees?

1. Hiring Friends/Family Without Experience

It’s easy when you first get started to think about hiring the people who are closest to you — like friends and family. But your first few hires are critical to your success. You want to make sure you hire team members who have the skills you need to fill the gaps in your company. In the long run, hiring someone you know who is not prepared can impact your relationship and your bottom line.

Your first employee is a very big expense for a small company. Typically, we want to hire for the size of our company and employ someone who is not very costly to hire. But this first hire is critical. It will define the early stages of your business and should not be brought in based on what salary you are willing to pay. Bring in someone with experience, with talent. A good hire will prove invaluable.

The biggest mistake I have made is just hiring someone to fix a problem. The problem starts with the entrepreneur. If you do not have a process or roadmap to fix the issue, hiring someone to attempt to fix it will cost you more in the long run. Ensure you understand what the problem is, and ensure you give proper training to make sure they will be successful as they grow with your company.

We tend to gravitate towards like-minded personalities in our lives, but I’ve found it’s best to keep this tendency in check when hiring. There’s nothing worse than ending up with a conference room full of clones (even if those clones are all highly skilled at their positions). A lack of diversity in personalities stifles creativity and is a nightmare to manage.

Early in my business I had a vague thought that I had too much work and should hire someone. I hired a smart young professional. However, we quickly ran into problems; I hadn’t thoroughly thought through exactly what she would do. My mistake was hiring before I had thoroughly defined the role and responsibilities, so I didn’t have the right framework for finding the right fit.

Hiring too fast without properly vetting potential hires. Let’s face it, fast growth forces us to hire quickly, but better vetting of candidates can prevent problems down the line. Slow down and put greater emphasis on really hiring the right people for your business needs. Find out what kind of expertise you need and hire them first; they will have the greatest impact initially.

Hiring first employees may be a casual process, so there may be no background checks or in-depth checking on them. This is a huge mistake. There needs to be a formal process for ensuring you are hiring the right kind of people, especially if you have trade secrets or a disruptive idea and you don’t want anything stolen.

8. Not Having An Employee Proprietary Information and Inventions Agreement

It is crucial that anyone who does work for your company signs an Employee Proprietary Information and Inventions Agreement. The agreement makes it clear that the work they do for the company belongs to the company. Investors will want to see the agreements in place, and it is the best way to protect yourself from showing your company’s secret sauce only to have the hire set up a competing company.

You should make sure that your first employee understands your vision and can grow into it. If he/she is willing to grow with the vision, then they will drive it without worrying too much about the salary and efforts. Your first employee will become an inspirational figure for your other employees. When I hired my first employee, I communicated my vision to him and he has been with me since 2009.

It’s important that the first set of people you hire be able to work closely together. Your first employees will play a large part in your company culture, and you need them to be people that work well with and play off of one another. Hire your first set of employees with an eye toward building a functioning team.

YEC

Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC launched BusinessCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Learn more at https://yec.co and https://businesscollective.com.